Mine opponents paralyze city in Peruvian highlands

LIMA, Peru – Police heavily outnumbered by indigenous protesters opposed to a planned silver mine holed up in their barracks Friday while rioters roamed through the regional capital of Puno in Peru's southern highlands.

Thousands of mostly Aymara Indians had been peacefully demonstrating for more than two weeks demanding Peru's government cancel the license for the Canadian-owned Santa Ana mine, mainly with a blockade that paralyzed commerce at the nearby Bolivian border crossing.

The protest turned violent Thursday when rioters attacked the tax office, hauling files and furniture into the street and setting them ablaze. Protesters smashed windows at other public buildings and banks and burned several vehicles.

Private and public business was paralyzed. A local radio station run by the Roman Catholic Church said protesters set fire to a customs storage area Friday morning and firefighters were unable to extinguish the blaze because police were absent.

"They've retreated to their posts and aren't going into the streets by order of Lima," a police officer told The Associated Press by phone from Puno. He agreed to discuss the situation only if not quoted by name because he wasn't authorized to give public statements.

The vice president of Bolivia's trucking association, Erland Melgar, told the AP that about 600 trucks were stranded on the Bolivian side of the border and about 180 on the Peruvian side.

The silver mine in dispute is owned by Bear Creek Mining Corp., a company based in Vancouver, British Columbia, that says it has invested $25 million in the project and had hoped to begin production next year.

Bear Creek's director, Andrew Swarthout, said the mine would have no impact on South America's biggest lake, which straddles the border between Peru and Bolivia. He said it isn't in the same drainage basin as Titicaca.

Swarthout told the AP that the project is supported by local communities who took part in public hearings and would directly benefit with 1,000 jobs.

The mine would use toxic cyanide to separate out the silver in what Swarthout called a common and proven technology. An environmental impact statement is under government review.

The trouble in Puno comes less than two weeks before Peru's June 5 presidential run-off election.

The strike's leader, Walter Aduviri, told Radioprogramas radio that if mining and oil exploration are not halted in Punom there will be no voting in the region.

"I didn't make the decision, the people did," he said.

That could hurt the leftist candidate in the election, former army officer Ollanta Humala, for whom Puno is a stronghold.

Humala is less business friendly than his opponent, Keiko Fujimori, who has a slight lead in opinion polls.

Humala says that if elected he would seek to make mining companies pay higher royalties — and make natural gas cheaper for Peruvians. Fujimori, daughter of imprisoned former President Alberto Fujimori, supports the current rules, which have been friendly to mining investors.

Companies have pledged more than $40 billion in investments in Peru's mining sector in the coming decade. Peru is a top exporter of gold, silver and copper, and mining accounts for 68 percent of its export revenues.

Government officials have said it would be unconstitutional to meet the protesters' demand and cancel mineral concessions.

Earlier this week, President Alan Garcia said the mounting protest had "an electoral whiff."

Bear Creek's Swarthout agreed, though he wouldn't point the finger at the Humala camp as some Peruvian analysts have.

"This is very, very political unfortunately in the runup to this election," Swarthout said of the protest, noting that Santa Ana is among about a dozen mining projects in Peru currently facing sometimes violent opposition.

"There are many companies watching this situation," he added. "If we run into serious problems and are not able to complete our investment on this project or another couple of projects that we're looking at, other companies are going to take pause as well."

That could hurt an economy that averaged 7 percent growth annually over the past decade.

Bear Creek would pay $330 million in taxes and royalties in the first 12 years of Santa Ana mine's operation, Swarthout said, adding that the figure didn't include the economic impact for 1,000 workers who would be employed for the project.

The company says the mine has proven and probable reserves of 63 million ounces of silver, which currently sells at about $38 an ounce.